Virgin Money muscles its way to the front of the pack with a reduced 2.69% fee on its 37-month balance transfer credit card

Virgin Money has landed the latest blow in the never-ending balance-transfer battle with a reduced handling fee on its market-leading 37-month credit card.

The provider has reduced the transfer fee by 0.1 percentage point to 2.69 per cent, a move that positions it at the top of the best-buys tables alongside Barclaycard's Platinum Credit Card.

Moving a £2,000 balance to either credit card would cost £53.80.

The credit card already offer 37 months' interest-free on both balance transfers and money transfers, plus it gives three months' 0 per cent on purchases.

Market leader: Virgin Money is offering 37 interest free borrowing for those who transfer a balance from an existing credit card or bank account.

The 37-Month Balance Transfer Credit Card was previously only offered on a limited basis lasting until November 2, however the provider has also extended the short-term offer indefinitely.

A spokesperson, from Moneyfacts.co.uk, said: 'The reduction to the cost of the initial balance transfer deal has made this deal more cost-effective, something that is sure to appeal to borrowers.

'Those looking to clear their credit card debts over the long-term are also likely to be pleased by the interest-free deals for both money transfers and purchases, which give some extra control over their spending. This is an outstanding product that fully deserves the highest Moneyfacts rating.'

Share this article

HOW THIS IS MONEY CAN HELP

Shifting debt from an existing credit card incurs a one-off transfer fee of 2.69 per cent, while moving money into a bank account carries a higher 4 per cent fee.

The deal also includes three months' 0 per cent on purchases.

Credit card companies only have to offer the advertised headline rate to 51 per cent of successful applicants. This means 49 per cent of borrowers given the card could be given a shorter interest-free term or higher interest rate.

However, one advantage for applicants of the Virgin Money credit card is that if they are approved by the provider they will automatically be given the advertised offer.

Watch out:

In order to qualify for the 0 per cent interest promotion, cardholders must transfer a balance within the first 60 days.

Once the introductory periods end, interest shoots up to 18.9 per cent so it is important to clear the balance within the first 37 months to avoid hefty interest payments.

Spend beyond your credit limit or fail to make a monthly minimum payment on time and cardholders risk losing the interest-free deal. Setting up a direct debit can help avoid missing repayments.

The best-buy tables are a constant merry-go-round as credit card providers battle to offer the most competitive balance transfer deal by either extending their 0 per cent interest deals or reducing transfer fees.

Virgin Money now offers the longest interest-free deal on both balance transfers and money transfers alongside Barclaycard. Both charge 2.69 per cent in handling fees.

Barclaycard charges a 3.5 per cent fee, however it offers a refund of 0.81 percentage points, to 2.69 per cent if you transfer the balance within 60 days of opening the account.

The card provider also offers six months' interest-free purchases.

Halifax follows close behind, offering the same 37 months' 0 per cent interest but charging a slightly higher fee of 2.75 per cent.

However, choosing a slightly shorter interest-free deal, a no-fee balance transfer credit card or a low-rate credit card instead could be a better option for some depending on how big their debt is and how quickly they can repay.

No-fee balance transfer deals

The average credit card charges between 2 to 3 per cent of the total amount when shifting debt. If you are confident you can pay it off quickly, opting for a card that charges no fee but offers a shorter interest-free term could end up cheaper.

Santander sits at the top of the best-buy list for credit cards charging no handling fee for balance transfers.

It’s paid-for 123 credit card includes a much shorter balance transfer window than the Virgin Money at just 23 months but it saves 2.79 per cent in transfer fees. On a £2,000 balance this would save £55.80.

Holders also get 23 months' 0 per cent interest on purchases. After this, spending clocks up interest at 16.9 per cent. Shoppers also earn cashback on their spending; Santander pays 3 per cent on fuel, National Rail and TfL, 2 per cent at department stores and 1 percent cashback at supermarkets.

However, this is offset by a £36 annual card cost. Customers that open a 123 Current Account at the same time can avoid this charge for the first 12 months.

Halifax and Tesco Bank also charges no balance transfer, but comes with slightly shorter 0 per cent term of 20 and 19 months respectively.

However, the advantage is that both providers do not apply an annual fee to their cards, saving £24 compared to the Santander 123 credit card.

The Tesco deal includes one month of interest-free purchases plus Clubcard loyalty points for spending. Standard interest is set at 18.9 per cent.

Low-rate credit cards

For those who would prefer to avoid temporary interest-free deals a credit card that charges a consistently low interest rate my be a better option.

Credit Card Reality Check Calculator

Your plastic debt

This calculator will show you just how long it's going to take you to clear your credit card balance if you don't wake up, face reality, stop paying the bare minimum and start clearing this punitive form of debt.

Your credit card balance:£

Interest rate:%

Monthly payment:£

Result

Number of monthly payments:

Clear your debt quickly

Now see how much you need to pay a month to clear your balance in the shortest possible time.